Pros and cons of an open position
Pros of an open position
An open position offers the opportunity for a trader to realise a profit. Without having an open position in a market, a trader would have no exposure and so couldn’t expect to receive any returns.
Leverage can be a great way for a trader to maximise profit on their open positions by gaining full market exposure for a small initial deposit. However, while trading on leverage can increase profits, it can also amplify losses.
Cons of an open position
With financial exposure, comes risk of losing money. As a result, it is important for a trader to create a risk management strategy. This could include learning about the risks of leveraged trading or how to hedge an open position.